Aqua Alliance Inc · 8-K · For 7/9/99 · EX-99

Filed On 7/12/99   ·   SEC File 1-10298   ·   Accession Number 950172-99-885

Current Report   ·   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         2±    13K 
 2: EX-99       Exhibit 1 - Agreement and Plan of Merger              24±   131K 
 3: EX-99       Exhibit 2 - Press Release                              1      9K 

EX-99   ·   Exhibit 1 - Agreement and Plan of Merger
Exhibit Table of Contents

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AGREEMENT AND PLAN OF MERGER,     

DATED AS OF JULY 9, 1999,     

AMONG     

VIVENDI,    

AQUA ACQUISITION CORPORATION    

AND     

AQUA ALLIANCE INC.    

  AGREEMENT AND PLAN OF MERGER, dated as of July 9, 1999 (this
"AGREEMENT"), among Vivendi, a sociEtE anonyme organized and existing under   
the laws of the Republic of France ("PARENT"), Aqua Alliance Corporation, a   
Delaware corporation and an indirect wholly owned subsidiary of Parent        
("PURCHASER"), and Aqua Alliance Inc., a Delaware corporation (the            
"COMPANY").                                                                   

   WHEREAS, Parent beneficially owns an aggregate of 153,609,975
shares (the "PURCHASER SHARES") of Class A Common Stock, par value $.001      
per share ("SHARES"), of the Company, constituting approximately 83% of the   
total outstanding Shares, and has proposed to the special committee of the    
Board of Directors of the Company (the "SPECIAL COMMITTEE"), that Purchaser   
acquire the remaining Shares;                                                 

     WHEREAS, Parent has also proposed to the Special Committee that
Purchaser acquire all outstanding Warrants issued pursuant to the Company     
Rights Agreement dated January 26, 1998 ("WARRANTS");                         

  WHEREAS, immediately prior to the Effective Time (as defined
below) Parent will cause the contribution of the Purchaser Shares to          
Purchaser (including Shares acquired through the exercise of all Warrants     
then owned directly or indirectly by Parent);                                 

      WHEREAS, the Board of Directors of the Company (the "BOARD") and
the Special Committee have determined that it is in the best interests of     
the Company to approve Purchaser's proposed acquisition and have voted (i)    
to recommend that the stockholders and Warrantholders of the Company accept   
the Offer (as defined below) and tender their Shares and Warrants pursuant    
to the Offer and (ii) to approve and deem advisable the merger (the           
"MERGER") of Purchaser with and into the Company, with the Company being      
the surviving corporation, in accordance with the General Corporation Law     
of the State of Delaware ("DELAWARE LAW") following consummation of the       
Offer;                                                                        

    WHEREAS, it is proposed that Purchaser will make a cash tender
offer (the "OFFER") in compliance with Section 14(d)(1) of the Securities     
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and      
regulations promulgated thereunder, to acquire (i) all the issued and         
outstanding Shares (other than the Purchaser Shares) for $2.90 per Share      
(such amount, or any greater amount per Share paid pursuant to the Offer,     
being hereinafter referred to as the "PER SHARE AMOUNT") and (ii) all         
issued and outstanding Warrants for $0.40 per Warrant (such amount, or any    
greater amount per Warrant paid pursuant to the Offer, being hereinafter      
referred to as the "PER WARRANT AMOUNT"), in each case, net to the seller     
in cash, upon the terms and subject to the conditions of this Agreement;      
and that the Offer will be followed by the Merger, pursuant to which each     
issued and outstanding Share not owned by Purchaser will be converted into    
the right to receive the Per Share Amount and each Warrant not owned by       
Purchaser will be converted into the right to exercise such Warrant in        
exchange for the Per Share Amount, upon the terms and subject to the          
conditions provided herein; and                                               

       WHEREAS, the Special Committee has received the opinion of Beacon
Group Capital Services, L.L.C. ("Beacon") that the consideration to be        
received by the holders of Shares (other than Parent and its subsidiaries)    
pursuant to the Offer and the Merger is fair to such holders from a           
financial point of view.                                                      

      NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally        
bound hereby, Parent, Purchaser and the Company hereby agree as follows:      

ARTICLE I     

THE OFFER     

     SECTION 1.01. THE OFFER. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 8.01 and none of the      
events set forth in Annex A hereto shall have occurred or be existing,        
Purchaser shall commence, and Parent shall cause Purchaser to commence,       
within the meaning of Rule 14d-2 under the Exchange Act, the Offer as         
promptly as reasonably practicable after the date hereof, but in no event     
later than five business days after the initial public announcement of        
Purchaser's intention to commence the Offer. The obligation of Purchaser to   
accept for payment and pay for Shares and/or Warrants tendered pursuant to    
the Offer shall be subject only to the satisfaction of the conditions set     
forth in Annex A hereto. Purchaser expressly reserves the right to waive      
any such condition, to increase the Per Share Amount and/or the Per Warrant   
Amount and to make any other changes in the terms and conditions of the       
Offer; PROVIDED, HOWEVER, that, without the prior written consent of the      
Special Committee, Purchaser will not (i) decrease the Per Share Amount or    
the Per Warrant Amount, (ii) reduce the maximum number of Shares or           
Warrants to be purchased in the Offer, (iii) change the form of the           
consideration payable in the Offer, (iv) add to, modify or supplement the     
conditions to the Offer set forth in Annex A hereto, (v) extend the           
expiration date of the Offer beyond the twentieth business day following      
commencement thereof; PROVIDED, HOWEVER, Purchaser may extend the             
expiration date of the Offer, (A) if the conditions to the Offer set forth    
in Annex A have not been satisfied and (B) to the extent necessary to         
respond to comments on the Offer Documents (as defined below) from the        
United States Securities and Exchange Commission (the "SEC") or (vi) make     
any other change in the terms or conditions of the Offer which is             
materially adverse to the holders of Shares or Warrants. The Per Share        
Amount and the Per Warrant Amount shall, subject to any applicable            
withholding of taxes, be net to each seller in cash, upon the terms and       
subject to the conditions of the Offer. Subject to the terms and conditions   
of the Offer, Purchaser shall, and Parent shall cause Purchaser to, accept    
for payment and pay, as promptly as practicable after expiration of the       
Offer, for all Shares and Warrants validly tendered and not properly          
withdrawn.                                                                    

(b) On the date of commencement of the Offer, Parent and  
Purchaser shall file with the SEC (i) a Tender Offer Statement on Schedule    
14D-1, including all exhibits thereto (together with all amendments and       
supplements thereto, the "SCHEDULE 14D-1"), with respect to the Offer and     
(ii) a Rule 13e-3 Transaction Statement on Schedule 13E-3, including all      
exhibits thereto (together with all amendments and supplements thereto, the   
"SCHEDULE 13E-3"), with respect to the Offer and the other transactions       
contemplated hereby (the "TRANSACTIONS"). The Schedule 14D-1 and the          
Schedule 13E-3 shall contain or shall incorporate by reference an offer to    
purchase (the "OFFER TO PURCHASE") and the related letter of transmittal      
(the Schedule 14D-1, the Schedule 13E-3, the Offer to Purchase, the related   
letter of transmittal and such other documents, together with all             
supplements and amendments thereto, being referred to herein collectively     
as the "OFFER DOCUMENTS"). Parent,  Purchaser and the Company shall correct   
promptly any information provided by any of them for use in the Offer         
Documents which shall become false or misleading, and Parent and Purchaser    
shall take all steps necessary to cause the Schedule 14D-1 and the Schedule   
13E-3, as so corrected, to be filed with the SEC and the other Offer          
Documents, as so corrected, to be disseminated to holders of Shares and       
Warrants, in each case as and to the extent required by applicable law.       
The Company, the Special Committee and their respective counsel shall be      
given reasonable opportunity to review and comment on the Offer Documents     
prior to the filing thereof with the SEC. Parent and Purchaser shall          
provide the Company, the Special Committee and their respective counsel       
with a copy of any written comments or telephonic notification of any oral    
comments Parent or Purchaser may receive from the SEC or its staff with       
respect to the Offer Documents promptly after the receipt thereof. Parent     
and its counsel shall provide the Company, the Special Committee and their    
respective counsel with a reasonable opportunity to participate in all        
communications with the SEC and its staff, including any meetings and         
telephone conferences, relating to the Offer Documents, the Transactions or   
this Agreement. In the event that Parent or the Purchaser receives any        
comments from the SEC or its staff with respect to the Offer Documents,       
each shall use its reasonable best efforts to respond promptly to such        
comments and take all other actions necessary to resolve the issues raised    
therein.                                                                      

      (c) Parent shall provide or cause to be provided to Purchaser on
a timely basis the funds necessary to accept for payment, and pay for, any    
Shares and/or Warrants that Purchaser becomes obligated to accept for         
payment, and pay for, pursuant to the Offer.                                  

SECTION 1.02. COMPANY ACTION. (a) As soon as reasonably   
practicable after the date of commencement of the Offer, the Company shall    
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-    
9, including all exhibits thereto (together with all amendments and           
supplements thereto, the "SCHEDULE 14D-9"), containing the recommendations    
of the Special Committee and the Board described in Section 3.04(b), and      
shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9     
under the Exchange Act, and any other applicable law.  The Company, Parent    
and Purchaser shall correct promptly any information provided by any of       
them for use in the Schedule 14D-9 which shall become false or misleading,    
and the Company shall take all steps necessary to cause the Schedule 14D-9,   
as so corrected, to be filed with the SEC and disseminated to holders of      
Shares and Warrants, in each case as and to the extent required by            
applicable law. Parent, Purchaser and their respective counsel shall be       
given the opportunity to review and comment on the Schedule 14D-9 prior to    
the filing thereof with the SEC. The Company shall provide Parent,            
Purchaser and their respective counsel with a copy of any written comments    
or telephonic notification of any oral comments the Company may receive       
from the SEC or its staff with respect to the Schedule 14D-9 promptly after   
the receipt thereof. The Company and its counsel shall provide Parent,        
Purchaser and their respective counsel with a reasonable opportunity to       
participate in all communications with the SEC and its staff, including any   
meetings and telephone conferences, relating to the Schedule 14D-9, the       
Transactions or this Agreement.                                               

(b) In connection with the Transactions, the Company shall
promptly furnish, or cause to be furnished, Parent and Purchaser with         
mailing labels containing the names and addresses of the record holders of    
Shares and Warrants as of a recent date and of those persons becoming         
record holders subsequent to such date, together with copies of all lists     
of stockholders, Warrantholders, security position listings and computer      
files and all other information in the Company's possession or control        
regarding the beneficial owners of Shares and Warrants, and shall furnish     
to Purchaser such information and assistance (including updated lists of      
stockholders, Warrantholders, security position listings and computer         
files) as Parent and Purchaser may reasonably request in communicating the    
Offer to the Company's stockholders and Warrantholders. Subject to the        
requirements of applicable law, and except for such steps as are necessary    
to disseminate the Offer Documents and any other documents necessary to       
consummate the Merger, Parent and Purchaser and their agents shall hold in    
confidence the information contained in any such labels, listings and         
files, will use such information only in connection with the Offer and the    
Merger and, if this Agreement shall be terminated, will deliver, and will     
use their reasonable efforts to cause their agents to deliver, to the         
Company all copies and any extracts or summaries from such information then   
in their possession or control.                                               

ARTICLE II    

THE MERGER    

 SECTION 2.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware       
Law, at the Effective Time (as hereinafter defined) Purchaser shall be        
merged with and into the Company. As a result of the Merger, the separate     
corporate existence of Purchaser shall cease and the Company shall continue   
as the surviving corporation of the Merger (the "SURVIVING CORPORATION").     

  SECTION 2.02. CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been           
abandoned pursuant to Section 8.01 and subject to the satisfaction or         
waiver of the conditions set forth in Article VII, the consummation of the    
Merger will take place as promptly as practicable (and in any event within    
two business days) after the satisfaction or waiver of the conditions set     
forth in Article VII at the offices of Skadden, Arps, Slate, Meagher & Flom   
LLP, 919 Third Avenue, New York, New York, unless another date, time or       
place is agreed to in writing by the parties hereto.                          

    SECTION 2.03. EFFECTIVE TIME. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in    
Article VII, the parties hereto shall cause the Merger to be consummated by   
filing a certificate of merger (the "CERTIFICATE OF MERGER") with the         
Secretary of State of the State of Delaware, in such form as is required      
by, and executed in accordance with the relevant provisions of, Delaware      
Law (the date and time of such filing being the "EFFECTIVE TIME").            

    SECTION 2.04. EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of     
Delaware Law. Without limiting the generality of the foregoing, and subject   
thereto, at the Effective Time all the property, rights, privileges, powers   
and franchises of the Company and Purchaser shall vest in the Surviving       
Corporation, and all debts, liabilities, obligations, restrictions,           
disabilities and duties of the Company and Purchaser shall become the         
debts, liabilities, obligations, restrictions, disabilities and duties of     
the Surviving Corporation.                                                    

     SECTION 2.05. CERTIFICATE OF INCORPORATION; BY-LAWS. (a) At the
Effective Time, the Certificate of Incorporation of Purchaser, as in effect   
immediately prior to the Effective Time, shall be the Certificate of          
Incorporation of the Surviving Corporation until thereafter amended as        
provided by law and such Certificate of Incorporation.                        

     (b) The By-laws of Purchaser, as in effect immediately prior to
the Effective Time, shall be the By-laws of the Surviving Corporation until   
thereafter amended as provided by law, the Certificate of Incorporation of    
the Surviving Corporation and such By-laws.                                   

      SECTION 2.06. DIRECTORS AND OFFICERS. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of     
the Surviving Corporation, each to hold office in accordance with the         
Certificate of Incorporation and By-laws of the Surviving Corporation. The    
officers of the Company immediately prior to the Effective Time shall be      
the initial officers of the Surviving Corporation, in each case until their   
respective successors are duly elected or appointed and qualified.            

       SECTION 2.07. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the     
Company or the holders of any of the following securities:                    

    (a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section     
2.07(b) and any Dissenting Shares (as hereinafter defined)) shall be          
cancelled and shall be converted automatically into the right to receive      
an amount equal to the Per Share Amount in cash (the "SHARE                   
CONSIDERATION") payable, without interest, to the holder of such Share,       
upon surrender, in the manner provided in Section 2.09, of the certificate    
that formerly evidenced such Share;                                           

    (b) Each Share and each Warrant owned by Purchaser immediately
prior to the Effective Time shall be cancelled without any conversion         
thereof and no payment or distribution shall be made with respect thereto;    

      (c) Each Warrant issued and outstanding immediately prior to the
Effective Time (other than any Warrants to be cancelled pursuant to Section   
2.07(b)) shall remain outstanding and shall be converted automatically into   
the  right to exercise each such Warrant at an exercise price of $2.50 in     
exchange for an amount equal to the Per Share Amount in Cash (the "WARRANT    
CONSIDERATION") payable without interest, to the holder of such Warrant,      
upon exercise, in the manner provided by the terms of such Warrant; and       

  (d) Each share of common stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time      
shall be converted into and exchanged for one validly issued, fully paid      
and nonassessable share of common stock, par value $.001 per share, of the    
Surviving Corporation.                                                        

SECTION 2.08. DISSENTING SHARES. (a) Notwithstanding any  
provision of this Agreement to the contrary, Shares that are outstanding      
immediately prior to the Effective Time and which are held by stockholders    
who shall have not voted in favor of the Merger or consented thereto in       
writing and who shall have demanded properly in writing appraisal for such    
Shares in accordance with Section 262 of Delaware Law (collectively, the      
"DISSENTING SHARES") shall not be converted into or represent the right to    
receive the Share Consideration. Such stockholders shall be entitled to       
receive payment of the appraised value of such Shares held by them in         
accordance with the provisions of such Section 262, except that all           
Dissenting Shares held by stockholders who shall have failed to perfect or    
who effectively shall have withdrawn or lost their rights to appraisal of     
such Shares under such Section 262 shall thereupon be deemed to have been     
converted into and to have become exchangeable for, as of the Effective       
Time, the right to receive the Share Consideration, without any interest      
thereon, upon surrender, in the manner provided in Section 2.09, of the       
certificate or certificates that formerly evidenced such Shares.              

(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands,   
and any other instruments served pursuant to Delaware Law and received by     
the Company and (ii) the opportunity to direct all negotiations and           
proceedings with respect to demands for appraisal under Delaware Law. The     
Company shall not, except with the prior written consent of Parent, make      
any payment with respect to any demands for appraisal or offer to settle or   
settle any such demands.                                                      

  SECTION 2.09. SURRENDER OF SHARES; STOCK TRANSFER BOOKS. (a)
Prior to the Effective Time, Parent shall designate a bank or trust company   
reasonably satisfactory to the Company to act as agent (the "PAYING AGENT")   
for the holders of Shares and Warrants in connection with the Merger to       
receive the funds to which holders of Shares and Warrants shall become        
entitled pursuant to Section 2.07(a) and Section 2.07(b), respectively.       
When and as needed, Parent shall make available to the Paying Agent           
sufficient funds to make the payments pursuant to Section 2.07 hereof to      
holders (other than Parent or any of its affiliates) of Shares and Warrants   
that are issued and outstanding immediately prior to the Effective Time       
(such amounts being hereinafter referred to as the "EXCHANGE FUND"), and to   
make the appropriate cash payments, if any, to holders of Dissenting          
Shares. The Paying Agent shall, pursuant to irrevocable instructions, make    
the payments provided for in the preceding sentence out of the Exchange       
Fund. The Exchange Fund shall not be used for any other purpose, except as    
provided in this Agreement.                                                   

      (b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a     
holder of record of Shares entitled to receive the Share Consideration        
pursuant to Section 2.07(a) a form of letter of transmittal in customary      
form (which shall specify that delivery shall be effected, and risk of loss   
and title to the certificates evidencing such Shares (the "CERTIFICATES"),    
shall pass, only upon proper delivery of the Certificates to the Paying       
Agent) and instructions for use in effecting the surrender of the             
Certificates pursuant to such letter of transmittal. Upon surrender to the    
Paying Agent of a Certificate, together with such letter of transmittal,      
duly completed and validly executed in accordance with the instructions       
thereto, and such other documents as may be required pursuant to such         
instructions, the holder of such Certificate shall be entitled to receive     
in exchange therefor the Share Consideration for each Share formerly          
evidenced by such Certificate, and such Certificate shall then be canceled.   
No interest shall accrue or be paid on the consideration payable upon the     
surrender of any Certificate for the benefit of the holder of such            
Certificate. If payment of the Share Consideration is to be made to a         
person other than the person in whose name the surrendered Certificate is     
registered on the stock transfer books of the Company, it shall be a          
condition of payment that the Certificate so surrendered shall be endorsed    
properly or otherwise be in proper form for transfer and that the person      
requesting such payment shall have paid all transfer and other taxes          
required by reason of the payment of the Share Consideration to a person      
other than the registered holder of the Certificate surrendered or shall      
have established to the satisfaction of the Surviving Corporation that such   
taxes either have been paid or are not applicable.                            

   (c) At any time following the sixth month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying       
Agent to deliver to it any funds which had been made available to the         
Paying Agent and not disbursed to holders of Shares  (including, without      
limitation, all interest and other income received by the Paying Agent in     
respect of all funds made available to it), and thereafter such holders       
shall be entitled to look to the Surviving Corporation (subject to            
abandoned property, escheat and other similar laws) only as general           
creditors thereof with respect to any Share Consideration that may be         
payable upon due surrender of the Certificates held by them.                  
Notwithstanding the foregoing, neither the Surviving Corporation nor the      
Paying Agent shall be liable to any holder of a Share for any Share           
Consideration delivered in respect of such Share to a public official         
pursuant to any abandoned property, escheat or other similar law.             

    (d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter        
there shall be no further registration of transfers of Shares on the          
records of the Company. From and after the Effective Time, the holders of     
Shares outstanding immediately prior to the Effective Time shall cease to     
have any rights with respect to such Shares except as otherwise provided      
herein or by applicable law.                                                  

    SECTION 2.10. WITHHOLDING RIGHTS. The Surviving Corporation or
the Paying Agent shall be entitled to deduct and withhold from the            
consideration otherwise payable pursuant to this Agreement to any holder of   
Shares or Warrants such amounts that the Surviving Corporation or the         
Paying Agent is required to deduct and withhold with respect to the making    
of such payment under the United States Internal Revenue Code of 1986, as     
amended (the "Code"), or any provision of state, local or foreign tax law.    
To the extent that amounts are so withheld by the Surviving Corporation or    
the Paying Agent, such amounts shall be treated for all purposes of this      
Agreement as having been paid to the holder of the Shares or Warrants in      
respect of which such deduction and withholding was made by the Surviving     
Corporation or the Paying Agent.                                              

ARTICLE III     

REPRESENTATIONS AND WARRANTIES OF THE COMPANY     

The Company hereby represents and warrants to Parent and  
Purchaser that, except as set forth in the Company SEC Reports (as defined    
herein) or the disclosure schedule dated the date hereof and attached         
hereto (the "DISCLOSURE SCHEDULE"), it being understood that disclosure on    
the Disclosure Schedule shall be deemed disclosure respecting all sections    
of the Agreement:                                                             

       SECTION 3.01. ORGANIZATION AND QUALIFICATION. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and    
in good standing under the laws of the jurisdiction of its incorporation      
and has the requisite corporate power and authority to own, lease and         
operate its properties and to carry on its business as it is now being        
conducted. Each of the Company and its Subsidiaries has all necessary         
licenses, permits, authorizations, and governmental approvals to own, lease   
and operate its properties and to carry on its business as it is currently    
being conducted, except where the failure to have such licenses, permits,     
authorizations and governmental approvals would not, individually or in the   
aggregate, have a Company Material Adverse Effect (as hereinafter defined).   
Each of the Company and its Subsidiaries is duly qualified and in good        
standing to do business in each jurisdiction in which the nature of the       
business conducted by it or the ownership or leasing of its properties        
makes such qualification necessary, other than where the failure to be so     
duly qualified and in good standing would not have a Company Material         
Adverse Effect. The term "COMPANY MATERIAL ADVERSE EFFECT," as used in this   
Agreement, means any change or effect that, individually or when taken        
together with all other such changes or effects, is or is reasonably likely   
to be materially adverse to the financial condition, business, or results     
of operations of the Company and its Subsidiaries, taken as a whole.          

 SECTION 3.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The
Company has heretofore furnished to Parent and Purchaser a complete and       
correct copy of the Certificate of Incorporation and the By-laws, each as     
amended to date, of the Company. Such Certificate of Incorporation and By-    
laws are in full force and effect. None of the Company and its Subsidiaries   
is in violation of any provision of its Certificate of Incorporation or By-   
laws.                                                                         

       SECTION 3.03. CAPITALIZATION. The authorized capital stock of the
Company consists of 255,000,000 Shares, 5,000 shares of Class B Common        
Stock, par value .001 per share ("CLASS B STOCK") and 2,500,000 shares of     
preferred stock, par value $.01 per share ("PREFERRED STOCK"). As of July     
9,1999, (i) 185,266,429 Shares were issued and outstanding, all of which      
were validly issued, fully paid and nonassessable, (ii) 89,902 Shares were    
held in the treasury of the Company, (iii) 2,000,000 Shares were authorized   
for future issuance (with respect to which options to acquire Shares were     
issued and outstanding) pursuant to employee stock options or stock           
incentive rights granted pursuant to the Company's stock option plans, (iv)   
3,949,099 Shares were reserved for issuance upon the exercise of Warrants,    
(v) 3,833,333 Shares were reserved for issuance upon the conversion of the    
Company's 8% Convertible Debentures Due 2015, (vi) no shares of Class B       
Common Stock were issued and outstanding; and (vii) no shares of Preferred    
Stock were issued and outstanding. Except as set forth in Section 3.03 of     
the Disclosure Schedule or as otherwise contemplated by this Agreement,       
there are no options, warrants or other rights, agreements, arrangements or   
commitments of any character relating to the issued or unissued capital       
stock of the Company or any Subsidiary or obligating the Company or any       
Subsidiary to issue or sell any shares of capital stock of, or other equity   
interests in, the Company or any Subsidiary. All shares of capital stock of   
the Company and any Subsidiary subject to issuance as aforesaid, upon         
issuance on the terms and conditions specified in the instruments pursuant    
to which they are issuable, will be duly authorized, validly issued, fully    
paid and nonassessable. There are no outstanding contractual obligations of   
the Company or any Subsidiary to repurchase, redeem or otherwise acquire      
any shares of capital stock of the Company or any Subsidiary or to provide    
funds to, or make any investment (in the form of a loan, capital              
contribution or otherwise) in, any person.                                    

SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. (a)The
Company has all necessary corporate power and authority to execute and        
deliver this Agreement, to perform its obligations hereunder and to           
consummate the Transactions. The execution and delivery of this Agreement     
by the Company and the consummation by the Company of the Transactions have   
been duly and validly authorized by all necessary corporate action, and no    
other corporate proceedings on the part of the Company are necessary to       
authorize this Agreement or to consummate the Transactions (other than,       
with respect to the Merger, the approval and adoption of this Agreement by    
the affirmative vote of a majority of the then outstanding Shares, if and     
to the extent required by applicable law, and the filing and recordation of   
appropriate merger documents as required by Delaware Law). This Agreement     
has been duly and validly executed and delivered by the Company and,          
assuming the due authorization, execution and delivery by Parent and          
Purchaser, constitutes a legal, valid and binding obligation of the Company   
enforceable against the Company in accordance with its terms.                 

     (b) The Company hereby represents that (i)the Special Committee
has been duly authorized and constituted, (ii) the Special Committee, at a    
meeting thereof duly called and held on July 9, 1999, determined that this    
Agreement and the Transactions are fair to and in the best interests of the   
stockholders of the Company (other than the Parent and its affiliates), and   
(iii)the Board of Directors of the Company, at a meeting thereof duly         
called and held on July 9, 1999, (A) determined that this Agreement and the   
Transactions are fair to and in the best interests of the stockholders of     
the Company, (B) determined that it is advisable for the Company to enter     
into, and, if and to the extent required by applicable law, for the           
stockholders of the Company to approve and adopt, this Agreement and the      
Transactions, (C) approved and adopted this Agreement and the Transactions,   
including the Offer and the Merger, (D) recommended that the stockholders     
of the Company tender their Shares pursuant to the Offer and, if and to the   
extent required by applicable law, approve and adopt this Agreement and the   
Merger and (E) recommended that the Warrantholders of the Company tender      
their Warrants pursuant to the Offer.                                         

       SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by the Company do not, and the       
performance of this Agreement by the Company will not, (i)conflict with or    
violate the Certificate of Incorporation or By-laws of the Company or any     
Subsidiary, (ii)assuming that all consents, approvals, authorizations, and    
other actions described in subsection (b) have been obtained or made, to      
the knowledge of the Company conflict with or violate any law, rule,          
regulation, order, judgment or decree applicable to the Company or any        
Subsidiary or by which any property or asset of the Company or any            
Subsidiary is bound or affected or (iii) except as set forth on Section       
3.05 of the Disclosure Schedule, result in any breach of or constitute a      
default (or an event that with notice or lapse of time or both would become   
a default) under, or give to others any rights of termination, amendment,     
acceleration or cancellation of, or require payment under, or result in the   
creation of any Encumbrance on any of the properties or assets of the         
Company or any of its Subsidiaries pursuant to, or trigger any right of       
first refusal under, any note, bond, mortgage, indenture, contract,           
agreement, lease, license, permit, franchise or other instrument or           
obligation to which the Company or any Subsidiary is a party or by which      
the Company or any Subsidiary or any of their respective properties is        
bound, except for any thereof that would not have a Company Material          
Adverse Effect. The restrictions on business combinations contained in        
Section 203(a) of Delaware Law will not apply to Parent, Purchaser or their   
respective affiliates as a result of this Agreement or the Transactions.      

     (b) The execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company will not,        
require any consent, approval, authorization or permit of, or filing with     
or notification to, any governmental or regulatory authority, domestic or     
foreign, except for applicable requirements, if any, of the Exchange Act,     
state securities or "blue sky" laws ("BLUE SKY LAWS"), and filing and         
recordation of appropriate merger documents as required by Delaware Law.      

      SECTION 3.06. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company
has filed all forms, reports and documents required to be filed by it with    
the SEC since October 31, 1996, and has heretofore made available to Parent   
and Purchaser, in the form filed with the SEC, (i) its Annual Reports on      
Form 10-K for the fiscal years ended October 31, 1996, 1997 and 1998,         
respectively, (ii) all proxy statements relating to the Company's meetings    
of stockholders (whether annual or special) held since October 31, 1996,      
and (iii)all other forms, reports and other registration statements (other    
than Quarterly Reports on Form 10-Q) filed by the Company with the SEC        
since October  31, 1996 (the forms, reports and other documents referred to   
in clauses (i), (ii) and (iii) above being referred to herein,                
collectively, as the "SEC REPORTS"). The SEC Reports (i) were prepared in     
accordance with the requirements of the Securities Act of 1933, as amended    
(the "SECURITIES ACT"), and the Exchange Act, as the case may be, and the     
rules and regulations thereunder, (ii) to the knowledge of the Company, did   
not at the time they were filed contain any untrue statement of a material    
fact or omit to state a material fact required to be stated therein or        
necessary in order to make the statements made therein, in the light of the   
circumstances under which they were made, not misleading, and (iii) were      
filed in a timely manner or were deemed filed in a timely manner pursuant     
to Rule 12(b)-25 Under the Exchange Act. No Subsidiary of the Company was     
or is required to file any form, report or other document with the SEC.       

    (b) Each of the financial statements (including, in each case,
any notes thereto) contained in the SEC Reports (i)was prepared in            
accordance with generally accepted accounting principles applied on a         
consistent basis throughout the periods indicated (except as may be           
indicated in the notes thereto) and each fairly presented in all material     
respects the consolidated financial position, results of operations and       
cash flows of the Company and the consolidated Subsidiaries as at the         
respective dates thereof and for the respective periods indicated therein,    
except that any unaudited interim financial statements were or will be        
subject to normal and recurring year-end adjustments that did not and are     
not expected, individually or in the aggregate, to have a Company Material    
Adverse Effect.                                                               

      (c) The Company has no liabilities or obligations of any nature,
except:(i) as and to the extent set forth on the balance sheet of the         
Company as at April 30, 1999, including the notes thereto (the "1999          
BALANCE SHEET"), (ii) as would not, individually or in the aggregate, have    
a Company Material Adverse Effect or (iii) liabilities and obligations        
incurred in the ordinary course of business consistent with past practice     
since April 30, 1999 and which would not have a Company Material Adverse      
Effect.                                                                       

       (d) Since April 30, 1999, there has not been any Company Material
Adverse Effect, except for changes that affect the economy in general or      
the industry in which the Company operates.                                   

     SECTION 3.07. OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY STATEMENT.
The information supplied by the Company for inclusion in the Schedule 14D-9   
and the Offer Documents shall not, at the respective times the Schedule       
14D-9 or the Offer Documents are filed with the SEC or are first published,   
sent or given to stockholders and/or Warrantholders of the Company, as the    
case may be, contain any untrue statement of a material fact or omit to       
state any material fact required to be stated therein or necessary in order   
to make the statements made therein, in light of the circumstances under      
which they are made, not misleading. The information supplied by the          
Company for inclusion in the proxy statement or information statement to be   
sent to the stockholders of the Company in connection with the                
Stockholders' Meeting (as defined in Section 6.01) or the information         
statement to be sent to such stockholders, as appropriate (such proxy         
statement or information statement, as amended or supplemented, being         
referred to herein as the "PROXY STATEMENT"), shall not, at the date the      
Proxy Statement (or any amendment or supplement thereto) is first mailed to   
stockholders of the Company, at the time of the Stockholders' Meeting and     
at the Effective Time, be false or misleading with respect to any material    
fact, or omit to state any material fact required to be stated therein or     
necessary in order to make the statements made therein, in the light of the   
circumstances under which they are made, not misleading or necessary to       
correct any statement in any earlier communication with respect to the        
solicitation of proxies for the Stockholders' Meeting which shall have        
become false or misleading. The Schedule 14D-9, Proxy Statement and the       
Offer Documents shall comply in all material respects as to form with the     
requirements of the Exchange Act and the rules and regulations thereunder     
except that no representation or warranty is made by the Company with         
respect to statements made or incorporated by reference therein based on      
information supplied by Parent or Purchaser for inclusion or incorporation    
by reference therein.                                                         

   SECTION 3.08. BROKERS. No broker, finder or investment banker
(other than Beacon) is entitled to any brokerage, finder's or other fee or    
commission in connection with the Transactions based upon arrangements made   
by or on behalf of the Company. The Company has heretofore furnished to       
Parent a complete and correct copy of all agreements between the Company      
and Beacon pursuant to which such firm would be entitled to any payment       
relating to the Transactions.                                                 

       SECTION 3.09. OPINION OF FINANCIAL ADVISOR. The Special Committee
has received the opinion of Beacon dated July 9, 1999, that, as of the date   
of such opinion, the Per Share Amount to be received by the stockholders of   
the Company pursuant to this Agreement are fair to such stockholders of the   
Company (other than Parent and its affiliates) from a financial point of      
view and such opinion has not been withdrawn. A copy of such opinion has      
been delivered to Parent and Purchaser.                                       

ARTICLE IV    

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER    

       Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:                                                  

SECTION 4.01. CORPORATE ORGANIZATION. Each of Parent and  
Purchaser is a corporation duly organized, validly existing under the laws    
of the jurisdiction of its organization and Purchaser is in good standing     
in the State of Delaware.                                                     

 SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Purchaser has all necessary corporate power and authority to       
execute and deliver this Agreement, to perform its obligations hereunder      
and to consummate the Transactions. The execution and delivery of this        
Agreement by Parent and Purchaser and the consummation by Parent and          
Purchaser of the Transactions have been duly and validly authorized by all    
necessary corporate action and no other corporate proceedings on the part     
of Parent or Purchaser are necessary to authorize this Agreement or to        
consummate the Transactions (other than, with respect to the Merger, the      
filing and recordation of appropriate merger documents as required by         
Delaware Law). This Agreement has been duly and validly executed and          
delivered by Parent and Purchaser and, assuming the due authorization,        
execution and delivery by the Company, constitutes a legal, valid and         
binding obligation of each of Parent and Purchaser enforceable against each   
of Parent and Purchaser in accordance with its terms.                         

       SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not,      
and the performance of this Agreement by Parent and Purchaser will not, (i)   
conflict with or violate the Certificate of Incorporation or By-laws (or      
equivalent organizational documents) of either Parent or Purchaser, or (ii)   
assuming that all consents, approvals, authorizations, and other actions      
described in subsection (b) have been made, conflict with or violate any      
law, rule, regulation, order, judgment or decree applicable to Parent or      
Purchaser or by which any property or asset of either of them is bound or     
affected.                                                                     

    (b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and         
Purchaser will not, require any consent, approval, authorization or permit    
of, or filing with or notification to, any governmental or regulatory         
authority, domestic or foreign, except (i) for applicable requirements, if    
any, of the Exchange Act, Blue Sky Laws, and filing and recordation of        
appropriate merger documents as required by Delaware Law and (ii) where       
failure to obtain such consents, approvals, authorizations or permits, or     
to make such filings or notifications, would not prevent or delay             
consummation of the Merger, or otherwise prevent Parent or Purchaser from     
performing their respective obligations under this Agreement.                 

SECTION 4.04. FINANCING. Each of Parent and Purchaser has 
available to it sufficient funds to acquire all the outstanding Shares and    
Warrants in the Offer and/or the Merger and to pay the related fees and       
expenses.                                                                     

     SECTION 4.05. OFFER DOCUMENTS; PROXY STATEMENT. The information
supplied by Parent and Purchaser for inclusion in the Offer Documents will    
not, at the time the Offer Documents are filed with the SEC or are first      
published, sent or given to stockholders of the Company, as the case may      
be, contain any untrue statement of a material fact or omit to state any      
material fact required to be stated therein or necessary in order to make     
the statements made therein, in light of the circumstances under which they   
are made, not misleading. The information supplied by Parent and Purchaser    
for inclusion in the Proxy Statement will not, on the date the Proxy          
Statement (or any amendment or supplement thereto) is first mailed to         
stockholders and Warrantholders of the Company, at the time of the            
Stockholders' Meeting (as defined below) or at the Effective Time, contain    
any statement which, at such time and in light of the circumstances under     
which it is made, is false or misleading with respect to any material fact,   
or omit to state any material fact required to be stated therein or           
necessary in order to make the statements therein not false or misleading     
or  necessary to correct any statement in any earlier communication with      
respect to the solicitation of proxies for the Stockholders' Meeting which    
shall have  become false or misleading. The Offer Documents shall comply in   
all material respects as to form with the requirements of the Exchange Act    
and the rules and  regulations thereunder.                                    

ARTICLE V     

COVENANTS OF THE COMPANY    

     SECTION 5.01. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company
hereby covenants and agrees that, prior to the Effective Time, unless         
otherwise expressly contemplated by this Agreement or consented to in         
writing by Parent and Purchaser, the Company will and will cause its          
Subsidiaries to (a)operate its business in the usual and ordinary course      
consistent with past practices; (b)use its reasonable best efforts to         
preserve substantially intact its business organization, maintain its         
rights and franchises, retain the services of its respective principal        
officers and key employees and maintain its relationships with its            
respective principal customers, suppliers and other persons with which it     
or any Subsidiary has significant business relations; and (c)use its          
reasonable best efforts to maintain and keep its properties and assets in     
as good repair and condition as at present, ordinary wear and tear            
excepted.                                                                     

ARTICLE VI    

ADDITIONAL AGREEMENTS     

    SECTION 6.01. STOCKHOLDERS' MEETING. If required by applicable
law in order to consummate the Merger, the Company, acting through the        
Board, shall in accordance with Delaware Law and its Certificate of           
Incorporation and By-laws, take all necessary action to duly call, give       
notice of, convene and hold an annual or special meeting of its               
stockholders as soon as practicable for the purpose of considering and        
taking action on this Agreement and the transactions contemplated hereby      
(the "STOCKHOLDERS' MEETING"). At the Stockholders' Meeting, Parent and       
Purchaser shall cause all Shares then owned by them and their subsidiaries    
to be voted in favor of the approval and adoption of this Agreement and the   
transactions contemplated hereby. In the event a Stockholders' Meeting is     
called, the Company shall use its reasonable best efforts to solicit from     
stockholders of the Company proxies in favor of the approval and adoption     
of the Merger Agreement and to secure the vote or consent of stockholders     
required by Delaware Law to approve and adopt the Merger Agreement, unless    
otherwise required by the applicable fiduciary duties of the directors of     
the Company or of the Company's directors constituting the Special            
Committee, as determined by such directors in good faith, and after           
consultation with independent legal counsel (which may include the            
Company's regularly engaged legal counsel).                                   

      SECTION 6.02. PROXY STATEMENT. If required by applicable law, as
soon as practicable following consummation of the Offer, Parent, Purchaser    
and the Company shall file the Proxy Statement with the SEC under the         
Exchange Act, and shall use its best efforts to have the Proxy Statement      
cleared by the SEC. Parent, Purchaser and the Company shall cooperate with    
each other in the preparation of the Proxy Statement, and the Company shall   
notify Parent and Purchaser of the receipt of any comments of the SEC with    
respect to the Proxy Statement and of any requests by the SEC for any         
amendment or supplement thereto or for additional information and shall       
provide to Parent and Purchaser promptly copies of all correspondence         
between the Company or any representative of the Company and the SEC. The     
Company shall give Parent, Purchaser and their respective counsel the         
opportunity to review the Proxy Statement prior to its being filed with the   
SEC and shall give Parent, Purchaser and their respective counsel the         
opportunity to review all amendments and supplements to the Proxy Statement   
and all responses to requests for additional information and replies to       
comments prior to their being filed with, or sent to, the SEC. Each of the    
Company, Parent and Purchaser agrees to use its reasonable efforts, after     
consultation with the other parties hereto, to respond promptly to all such   
comments of and requests by the SEC and to cause the Proxy Statement and      
all required amendments and supplements thereto to be mailed to the holders   
of Shares entitled to vote at the Stockholders' Meeting at the earliest       
practicable time.                                                             

   SECTION 6.03. PUBLIC ANNOUNCEMENTS. Parent, Purchaser and the
Company shall each obtain the prior consent of each other before issuing      
any press release or otherwise making any public statements with respect to   
this Agreement or any Transaction and shall not issue any such press          
release or make any such public statement without such prior consent,         
except as may be required by law or any listing agreement with a national     
securities exchange to which Parent or the Company is a party.                

       SECTION 6.04.  REDEMPTION OF SUBORDINATED CONVERTIBLE DEBENTURES.
The Company shall use its reasonable best efforts to cause the redemption     
of the Company's 8% Subordinated Convertible Debentures prior to the          
Effective Time or as soon as reasonably practicable thereafter.               

       SECTION 6.05. FURTHER ACTION. Subject to the terms and conditions
herein provided, each of the parties hereto covenants and agrees to use all   
reasonable efforts to deliver or cause to be delivered such documents and     
other papers and to take or cause to be taken such further actions as may     
be necessary, proper or advisable under applicable laws to consummate and     
make effective the Transactions, including the Merger.                        

ARTICLE VII     

CONDITIONS TO THE MERGER    

SECTION 7.01. CONDITIONS TO THE MERGER. The respective    
obligations of each party to effect the Merger shall be subject to the        
satisfaction at or prior to the Effective Time of the following conditions,   
any or all of which may be waived, in whole or in part, to the extent         
permitted by applicable law:                                                  

   (a) STOCKHOLDER APPROVAL. This Agreement and the Transactions
shall have been approved and adopted by the affirmative vote of the           
stockholders of the Company to the extent required by Delaware Law and the    
Certificate of Incorporation and By-laws of the Company; and                  

   (b) NO ORDER. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state    
court of competent jurisdiction shall have enacted, issued, promulgated,      
enforced or entered any law, rule, regulation, executive order, decree,       
injunction or other order (whether temporary, preliminary or permanent)       
which is then in effect and has the effect of making the acquisition of       
Shares by Purchaser illegal or otherwise restricting, preventing or           
prohibiting consummation of the Offer or the Merger.                          

ARTICLE VIII    

TERMINATION, AMENDMENT AND WAIVER     

     SECTION 8.01. TERMINATION. This Agreement may be terminated and
the Merger and the other transactions contemplated hereby may be abandoned    
at any time prior to the Effective Time, notwithstanding any requisite        
approval and adoption of this Agreement and the transactions contemplated     
hereby by the stockholders of the Company: (a) by mutual written consent      
duly authorized by the Boards of Directors of Parent, Purchaser and the       
Company, if such termination is also approved by the Special Committee;       

(b) by either Parent, Purchaser or the Company if (i) the 
Effective Time shall not have occurred on or before December 31, 1999;        
PROVIDED, HOWEVER, that the right to terminate this Agreement under this      
Section 8.01(b) shall not be available to any party whose failure to          
fulfill any obligation under this Agreement has been the cause of, or         
resulted in, the failure of the Effective Time to occur on or before such     
date or (ii) any court of competent jurisdiction or other governmental        
authority shall have issued an order, decree, ruling or taken any other       
action restraining, enjoining or otherwise prohibiting the Merger and such    
order, decree, ruling or other action shall have become final and             
nonappealable; or                                                             

     (c) by Parent, if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A       
hereto, Purchaser shall have (A) failed to commence the Offer within 60       
days following the date of this Agreement, (B) terminated the Offer without   
having accepted any Shares or Warrants for payment thereunder, or (C)         
failed to pay for the Shares and Warrants validly tendered pursuant to the    
Offer within 90 days following the commencement of the Offer, unless such     
termination or failure to pay for Shares or Warrants shall have been caused   
by or resulted from the failure of Parent or Purchaser to perform in any      
material respect any covenant or agreement of either of them contained in     
this Agreement or the material breach by Parent or Purchaser of any           
representation or warranty of either of them contained in this Agreement or   
(ii) prior to the purchase of any Shares or Warrants validly tendered         
pursuant to the Offer, the Special Committee shall have withdrawn or          
modified in a manner that is, in the reasonable judgment of Parent,           
materially adverse to Parent or Purchaser, its approval or recommendation     
of this Agreement, the Offer, the Merger or any other Transaction or shall    
have recommended another merger, consolidation or business combination        
involving, or acquisition of, the Company or its assets or another tender     
offer for Shares or Warrants, or shall have resolved to do any of the         
foregoing.                                                                    

SECTION 8.02. EFFECT OF TERMINATION. In the event of the  
termination of this Agreement pursuant to Section 8.01, this Agreement        
shall forthwith become void, and there shall be no liability on the part of   
any party hereto, except as set forth in Sections 9.01 and 9.11; PROVIDED,    
HOWEVER that nothing contained herein shall relieve any party from            
liability for wilful breach of this Agreement.                                

   SECTION 8.03. AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards     
of Directors at any time prior to the Effective Time; PROVIDED, HOWEVER,      
that, after the approval and adoption of this Agreement and the               
Transactions contemplated hereby by the stockholders of the Company, no       
amendment may be made which would reduce the amount or change the type of     
consideration into which each Share shall be converted upon consummation of   
the Merger, imposes conditions to the Merger other than set forth in          
Article VII or would otherwise amend or change the terms and conditions of    
the Merger in a manner materially adverse to the holders of Shares, other     
than Parent and its affiliates; and PROVIDED FURTHER that such amendment is   
also approved by the Special Committee. This Agreement may not be amended     
except by an instrument in writing signed by the parties hereto.              

    SECTION 8.04. WAIVER. At any time prior to the Effective Time,
any party hereto may (i) extend the time for the performance of any           
obligation or other act of any other party hereto, (ii) waive any             
inaccuracy in the representations and warranties contained herein or in any   
document delivered pursuant hereto and (iii) waive compliance with any        
agreement or condition contained herein; PROVIDED, HOWEVER, that, if the      
Company seeks to make such extension or waiver as provided in (i), (ii) or    
(iii) above, it must first obtain the approval of the Special Committee.      
Any such extension or waiver shall be valid if set forth in an instrument     
in writing signed by the party or parties to be bound thereby.                

ARTICLE IX    

GENERAL PROVISIONS    

   SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this            
Agreement shall terminate at the Effective Time or upon the termination of    
this Agreement pursuant to Section 8.01, as the case may be, except that      
the agreements set forth in Articles II and this Article IX shall survive     
the Effective Time indefinitely.                                              

       SECTION 9.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or      
made (and shall be deemed to have been duly given or made upon receipt) by    
delivery in person, by overnight courier service, by facsimile (followed by   
delivery of a copy via overnight courier service) or by registered or         
certified mail (postage prepaid, return receipt requested) to the             
respective parties at the following addresses (or at such other address for   
a party as shall be specified in a notice given in accordance with this       
Section 9.02):                                                                

(a)      if to Parent or Purchaser:       

             C/O Vivendi North America Corporation
800 3rd Avenue          
17th Floor              
New York, NY 10022      
  Attention: General Counsel
  Telecopier: (212) 753-9301

with a copy to:         

                Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue        
New York, NY  10022     
           Attention:  Martha E. McGarry, Esq.
  Telecopier: (212) 735-2000

(b)      if to the Company:               

Aqua Alliance Inc.      
30 Harvard Mill Square  
Wakefield, Ma. 01880    
  Attention: General Counsel
  Telecopier: (212) 702-2711

with a copy to:         

                Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue        
New York, NY 10022      
          Attention: Martha E. McGarry, Esq.
  Telecopier: (212) 735-2000

SECTION 9.03.  CERTAIN DEFINITIONS.  For purposes of this 
Agreement, the term:                                                          

 (a) "AFFILIATE" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under   
common control with, the first mentioned person;                              

     (b) "BUSINESS DAY" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the case    
of determining a date when any payment is due, any day on which banks are     
not required or authorized by law or executive order to close in the City     
of New York;                                                                  

      (c) "ENCUMBRANCE" means any security interest, pledge, mortgage,
lien, charge, adverse claim of ownership or use, or other encumbrance of      
any kind.                                                                     

 (d) "PERSON" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as    
defined in Section 13(d) of the Exchange Act);                                

(e) "SUBSIDIARY" or "SUBSIDIARIES" means any corporation, 
partnership, joint venture or other legal entity of which the Company or      
any Subsidiary of the Company, as the case may be (either alone or through    
or together with any other Subsidiary), owns, directly or indirectly, 50%     
or more of the stock or other equity interests the holders of which are       
generally entitled to vote for the election of the board of directors or      
other governing body of such corporation or other legal entity; and           

   SECTION 9.04. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any      
rule of law, or public policy, all other conditions and provisions of this    
Agreement shall nevertheless remain in full force and effect so long as the   
economic or legal substance of the Transactions is not affected in any        
manner materially adverse to any party. Upon such determination that any      
term or other provision is invalid, illegal or incapable of being enforced,   
the parties hereto shall negotiate in good faith to modify this Agreement     
so as to effect the original intent of the parties as closely as possible     
in a mutually acceptable manner in order that the Transactions be             
consummated as originally contemplated to the fullest extent possible.        

SECTION 9.05. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
constitutes the entire agreement among the parties with respect to the        
subject matter hereof and supersedes all prior agreements and undertakings,   
both written and oral, among the parties, or any of them, with respect to     
the subject matter hereof. This Agreement shall not be assigned by            
operation of law or otherwise, except that Parent and Purchaser may assign    
all or any of their rights and obligations hereunder to any affiliate of      
Parent provided that no such assignment shall relieve the assigning party     
of its obligations hereunder if such assignee does not perform such           
obligations.                                                                  

SECTION 9.06. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and        
nothing in this Agreement, express or implied, is intended to or shall        
confer upon any other person any right, benefit or remedy of any nature       
whatsoever under or by reason of this Agreement, other than Section 6.04      
(which is intended to be for the benefit of the persons covered thereby and   
may be enforced by such persons).                                             

       SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement   
was not performed in accordance with the terms hereof and that the parties    
shall be entitled to specific performance of the terms hereof, in addition    
to any other remedy at law or equity.                                         

     SECTION 9.08. GOVERNING LAW. Except to the extent that Delaware
Law applies to these Transactions, this Agreement shall be governed by, and   
construed in accordance with, the laws of the State of New York applicable    
to contracts executed in and to be performed in that State.                   

   SECTION 9.09. HEADINGS. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not   
affect in any way the meaning or interpretation of this Agreement.            

       SECTION 9.10. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate         

counterparts, each of which when executed shall be deemed to be an original   
but all of which taken together shall constitute one and the same             
agreement.                                                                    

     SECTION 9.11. FEES AND EXPENSES. All fees and expenses incurred
in connection with this Agreement and the Transactions contemplated hereby    
shall be paid by Parent.                                                      

       IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their     
respective officers thereunto duly authorized.                                

                              AQUA ALLIANCE INC.

                                   By:  /s/ Thierry Mallet
                                             -------------------------
                                 Name:  Thierry Mallet
                                    Title: President and CEO

                   VIVENDI

                                  By:  /s/ Daniel Caille
                                             -------------------------
                                Name:  Daniel Caille
                            Title: Directeur

                            AQUA ACQUISITION
                       CORPORATION

                                 By: /s/ Michel Avenas
                                             -------------------------
                                Name:  Michel Avenas
                            Title: President

                                                               ANNEX A

Notwithstanding any other term or provision of the Offer, Purchaser 
shall not be required to, subject to any applicable rules and regulations       
of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to         
Purchaser's obligation to pay for or return tendered Shares and Warrants        
promptly after termination or withdrawal of the Offer), accept for payment,     
purchase or pay for any validly tendered Shares and Warrants and may            
terminate or amend the Offer and may postpone the acceptance for payment of     
and payment for any Shares and Warrants, if (i) the Minimum Condition (as       
defined in the Offer to Purchase) is not satisfied or (ii) at any time on       
or after July 16, 1999, and prior to the acceptance for payment of any          
Shares or Warrants, any of the following shall occur or exist (or shall         
have been determined by the Company to have occurred or existed) that, in       
Purchaser's judgment in any such case and regardless of the                     
circumstances giving rise thereto (including an action or omission to act       
by Purchaser), makes it inadvisable or impracticable to proceed with            
the Offer or with such acceptance for payment or payment:                       

 (a) there shall have been any action threatened or taken, or approval
withheld, or any statute, rule or regulation proposed, sought, promulgated,   
enacted, entered, amended, enforced or deemed to be applicable to the         
Offer, the Merger, Parent or Purchaser or any of their subsidiaries, by       
any governmental, regulatory or administrative authority or agency or         
tribunal, domestic or foreign, which, in Purchaser's sole judgment,           
would directly or indirectly: (i) make the acceptance for payment of, or      
payment for, some or all of the Shares or Warrants illegal or otherwise       
restrict or prohibit consummation of the Offer or the Merger, or (ii) delay   
or restrict the ability of Purchaser, or render Purchaser unable,             
to accept for payment or pay for some or all of the Shares or Warrants        
pursuant to the Offer or to consummate the Merger; or                         

(b) there shall be threatened, instituted or pending any action or  
proceeding by any government or governmental authority or agency, domestic    
or foreign, or by any other person, domestic or foreign, before any court     
or governmental authority or agency, domestic or foreign, challenging or      
seeking to, or which could, make illegal, delay or otherwise directly or      
indirectly restrain or prohibit or make materially more costly (i) the        
making of the Offer, (ii) the acceptance for payment of, or payment for,      
some of or all Shares or Warrants pursuant to the Offer, (iii) the purchase   
of Shares or Warrants pursuant to the Offer, (iv) consummation of the         
Merger, (v) seeking to obtain damages in connection with the Offer or the     
Merger, or (vi) seeking to restrain or prohibit the consummation of the       
Offer, the Merger or the transactions contemplated thereby or which           
otherwise directly or indirectly relates to the Offer or the Merger; or       

(c) a preliminary or permanent injunction or other order by any     
Federal or state court which prevents (i) the acceptance for payment of, or   
payment for, some of or all the Shares or Warrants pursuant to the Offer or   
(ii) consummation of the Merger shall have been issued and shall remain in    
effect; or                                                                    

(d) the Special Committee (i) shall have withdrawn or modified in a 
manner that is, in the reasonable judgment of Purchaser, materially           
adverse to Purchaser or Parent (including by way of any amendment to          
the Schedule 13E-3) its recommendation of the Offer or (ii) shall have        
resolved to do any of the foregoing; or                                       

  (e) any change shall occur or be threatened in the business, condition
(financial or other), income, operations or prospects of the Company and      
its subsidiaries, taken as a whole, which is or may be material to the        
Company and its subsidiaries taken as a whole; or                             

(f) there shall have occurred: (i) the declaration of any banking   
moratorium or suspension of payments in respect of banks in the United        
States; (ii) any general suspension of trading in, or limitation on prices    
for, securities on any United States national securities exchange or in the   
over-the-counter market; (iii) the commencement of a war, armed hostilities   
or any other national or international crisis directly or indirectly          
involving the United States; (iv) any limitation (whether or not mandatory)   
by any governmental, regulatory or administrative agency or authority on,     
or any event which might affect, the extension of credit by banks or other    
lending institutions in the United States; or (v) in the case of any of the   
foregoing existing at the time of the commencement of the Offer, a material   
acceleration or worsening thereof; or                                         

(g) all consents and approvals required to be obtained from any     
Federal or state governmental agency, authority or instrumentality in         
connection with the Offer shall not have been obtained or Purchaser           
shall have been advised that any such consent or approval will be denied or   
substantially delayed, or will not be given other than upon terms or          
conditions which would, in the opinion of Purchaser, make it                  
impracticable to proceed with the Offer or the Merger; or                     

(h)  Parent, Purchaser and the Company (with the approval of the    
Special Committee) shall have agreed that Purchaser shall terminate the       
Offer or postpone for payment of or the payment for Shares or Warrants        
thereunder.                                                                   

The foregoing conditions are for Purchaser's sole benefit and may   
be asserted by Purchaser regardless of the circumstances giving rise to       
any such condition (including any action or inaction by Purchaser) or         
may be waived by Purchaser in whole or in part. Purchaser's failure           
at any time to exercise any of the foregoing rights shall not be deemed a     
waiver of any such right, and each such right shall be deemed an ongoing      
right that may be asserted at any time and from time to time. In certain      
circumstances, if Purchaser waives any of the foregoing conditions, it        
may be required to extend the Expiration Date of the Offer. Any               
determination by Purchaser concerning the events described above and          
any related judgment or decision by Purchaser regarding the                   
inadvisability of proceeding with the purchase of or payment for any Shares   
or Warrants tendered will be final and binding on all parties.                

TABLE OF CONTENTS     

                                                                      PAGE
ARTICLE I                                                                     

  THE OFFER  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
  SECTION 1.01. THE OFFER. . . . . . . . . . . . . . . . . . . . . . . 2
  SECTION 1.02. COMPANY ACTION . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II                                                                    

  THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
  SECTION 2.01. THE MERGER . . . . . . . . . . . . . . . . . . . . . . 5
  SECTION 2.02. CLOSING  . . . . . . . . . . . . . . . . . . . . . . . 5
  SECTION 2.03. EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . 5
  SECTION 2.04. EFFECT OF THE MERGER . . . . . . . . . . . . . . . . . 6
  SECTION 2.05. CERTIFICATE OF INCORPORATION; BY-LAWS  . . . . . . . . 6
  SECTION 2.06. DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . 6
  SECTION 2.07. CONVERSION OF SECURITIES . . . . . . . . . . . . . . . 6
  SECTION 2.08. DISSENTING SHARES  . . . . . . . . . . . . . . . . . . 7
SECTION 2.09. SURRENDER OF SHARES; STOCK TRANSFER                   
                  BOOKS  . . . . . . . . . . . . . . . . . . . . . . . 8
  SECTION 2.10. WITHHOLDING RIGHTS . . . . . . . . . . . . . . . . . . 9

ARTICLE III                                                                   

  REPRESENTATIONS AND WARRANTIES OF THE COMPANY  . . . . . . . . . .  10
  SECTION 3.01. ORGANIZATION AND QUALIFICATION . . . . . . . . . . .  10
SECTION 3.02. CERTIFICATE OF INCORPORATION AND                      
                  BY-LAWS  . . . . . . . . . . . . . . . . . . . . .  10
  SECTION 3.03. CAPITALIZATION . . . . . . . . . . . . . . . . . . .  10
  SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . .  11
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND                     
                  CONSENTS . . . . . . . . . . . . . . . . . . . . .  12
  SECTION 3.06. SEC FILINGS; FINANCIAL STATEMENTS  . . . . . . . . .  13
  SECTION 3.07. OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY STATEMENT.  .  14
  SECTION 3.08. BROKERS  . . . . . . . . . . . . . . . . . . . . . .  15
  SECTION 3.09. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . .  15

ARTICLE IV                                                                    

  REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER . . . . . .  15
  SECTION 4.01. CORPORATE ORGANIZATION . . . . . . . . . . . . . . .  15
  SECTION 4.02. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . .  15
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND                     
                 CONSENTS  . . . . . . . . . . . . . . . . . . . . .  16
  SECTION 4.04. FINANCING  . . . . . . . . . . . . . . . . . . . . .  16
  SECTION 4.05. OFFER DOCUMENTS; PROXY STATEMENT . . . . . . . . . .  16

ARTICLE V                                                                     

  COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . .  17
  SECTION 5.01. AFFIRMATIVE COVENANTS OF THE COMPANY . . . . . . . .  17

ARTICLE VI                                                                    

  ADDITIONAL AGREEMENTS  . . . . . . . . . . . . . . . . . . . . . .  17
  SECTION 6.01. STOCKHOLDERS' MEETING  . . . . . . . . . . . . . . .  17
  SECTION 6.02. PROXY STATEMENT  . . . . . . . . . . . . . . . . . .  18
  SECTION 6.03. PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . .  18
  SECTION 6.04.  REDEMPTION OF SUBORDINATED CONVERTIBLE DEBENTURES .  19
  SECTION 6.05. FURTHER ACTION . . . . . . . . . . . . . . . . . . .  19

ARTICLE VII                                                                   

  CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . . . .  19
  SECTION 7.01. CONDITIONS TO THE MERGER . . . . . . . . . . . . . .  19

ARTICLE VIII                                                                  

  TERMINATION, AMENDMENT AND WAIVER  . . . . . . . . . . . . . . . .  20
  SECTION 8.01. TERMINATION  . . . . . . . . . . . . . . . . . . . .  20
  SECTION 8.02. EFFECT OF TERMINATION  . . . . . . . . . . . . . . .  21
  SECTION 8.03. AMENDMENT  . . . . . . . . . . . . . . . . . . . . .  21
  SECTION 8.04. WAIVER . . . . . . . . . . . . . . . . . . . . . . .  21

ARTICLE IX                                                                    

  GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . .  21
SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND       
                  AGREEMENTS   . . . . . . . . . . . . . . . . . . .  21
  SECTION 9.02. NOTICES  . . . . . . . . . . . . . . . . . . . . . .  22
  SECTION 9.03. CERTAIN DEFINITIONS  . . . . . . . . . . . . . . . .  23
  SECTION 9.04. SEVERABILITY . . . . . . . . . . . . . . . . . . . .  23
  SECTION 9.05. ENTIRE AGREEMENT; ASSIGNMENT . . . . . . . . . . . .  24
  SECTION 9.06. PARTIES IN INTEREST  . . . . . . . . . . . . . . . .  24
  SECTION 9.07. SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . .  24
  SECTION 9.08. GOVERNING LAW  . . . . . . . . . . . . . . . . . . .  24
  SECTION 9.09. HEADINGS . . . . . . . . . . . . . . . . . . . . . .  24
  SECTION 9.10. COUNTERPARTS . . . . . . . . . . . . . . . . . . . .  25
  SECTION 9.11. FEES AND EXPENSES  . . . . . . . . . . . . . . . . .  25

ANNEX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  A-I  

Dates Referenced Herein   and   Documents Incorporated By Reference

This 8-K Filing		Date		Other Filings
		10/31/96		10-K
		10/31/97		8-K, S-1, 10-K
		1/26/98
		10/31/98		10-K
		4/30/99		10-Q
For The Period Ended		7/9/99
Filed On / Filed As Of		7/12/99
		7/16/99		SC 14D9, SC 13D/A, SC 14D1
		12/31/99
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